A new mortgage lender is shaking things up by offering loans up to six times your annual income. But with the cost of living already biting, is this a dream come true or a recipe for disaster?

April Mortgages, a newcomer to the mortgage scene, has announced it will lend up to six times your salary to first-time buyers, home movers and those looking to remortgage. This applies whether you’re applying alone or with someone else. For example, a couple earning a combined £75,000 could potentially borrow a whopping £450,000.

This is a major departure from the norm. Most lenders currently cap borrowing at 4.5 times your income.

What’s the catch?

Before you get too excited, there are a few things to keep in mind.

• Higher rates: April Mortgages’ rates aren’t the cheapest on the market. You might find better deals elsewhere, especially if you have a larger deposit.
• Limited to 85% loan-to-value: To qualify for the six times income offer, your mortgage can’t be more than 85% of the property value. This means you’ll need a deposit of at least 15%.
• Not for everyone: Borrowing the maximum amount could leave you with very little wiggle room in your budget. It’s crucial to consider what you can comfortably afford.

What are the potential benefits?

• Get the home you want: If you’re struggling to afford a property in your area, this could be a way to boost your borrowing power.
• Longer fixed-rate options: April Mortgages offers fixes of up to 15 years, providing long-term peace of mind. This could be attractive in the current climate of rising interest rates.
• Automatic rate reductions: As you pay down your mortgage and your loan-to-value ratio improves, your interest rate could automatically decrease, potentially saving you money.

What do the experts say?

Opinions are divided. Some mortgage brokers welcome the increased flexibility, especially for those struggling with affordability. Others urge caution, warning that overstretching yourself financially can have serious consequences.

What should you do?

• Speak to a mortgage broker: They can help you compare deals from different lenders, including April Mortgages, and find the best option for your circumstances.
• Crunch the numbers: Use a mortgage calculator to see what your monthly payments would be at different loan amounts and interest rates.
• Don’t overstretch: Only borrow what you can comfortably repay, even if rates rise.
• Consider your options: Explore all possibilities, including buying a cheaper property, saving a larger deposit, or waiting for the market to cool down.

The bottom line:

April Mortgages’ offer of six times income mortgages could be a lifeline for some buyers, but it’s not a decision to take lightly. Carefully weigh the risks and benefits, seek professional advice, and make sure you’re comfortable with the potential consequences.